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How To Teach Your Children How To Handle Money

How To Teach Your Children How To Handle Money

 1. Why You Should Teach Your Children About Money

You can’t teach your children how to manage their money if you don’t manage it well yourself. Leaving your children ignorant of money management principles and habits is a huge risk that you don’t want to take. This article will show you how you can give your children the advantage they need, and help them win with money at every age.

2. Simple Ways To Teach Your Children About Money

At different stages of life, your children need different kinds of lessons on money responsibility, and management.  Here are some ideas that might help you get started teaching your children to be good stewards of their money through the years.

 

 How to teach preschoolers and kindergarteners about money 

While it may be too early to teach very young children how to compare natural gas utility rates and prices, or Georgia state income taxes, there are plenty of great lessons that your pre-k children can understand and embrace.

To save, use a clear jar. Although the piggy bank is great, it doesn’t provide children with a visual. They can see the money grow when you use a clear container. Yesterday they had a dollar bill with five dimes. Today they have a quarter, five dimes, and a dollar bill.

Set an example. The University of Cambridge has found that children’s money habits are formed as early as 7 years of age. Little eyes are constantly watching. They’ll notice if you are wasting money. They’ll also notice if your spouse and you are fighting over money. If you set a good example, they will be more likely to follow it as they age.

They will be able to see that the stuff they are buying is expensive. It’s not enough to just say “That pack of toys cars costs $5,” but you need to help them make a few dollars from their jar and bring it to the store. Then, physically hand the money over to the cashier. This simple act will make a bigger impact than a lecture of five minutes.

 How to teach middle-schoolers and elementary students about money 

Show the cost of an opportunity. This is another way to say, “If this video game is bought, then you won’t have enough money to buy the shoes you want.”

Don’t give allowances but commissions. Don’t give your children money just because, but rather, you can pay them for the chores they do around the house, such as cleaning up the trash or mowing the lawn. In Smart Money Smart Kids, Dave and Rachel Cruze discuss this system extensively. This concept will help your children understand that money can be earned, not given to them.

Avoid impulse purchases.  “Mom, this is a cute dress I found. It’s perfect, and I love it!” Does this sound familiar? This age group can make a profit on impulse purchases, especially when they use someone else’s money.

Teach them to give. After they have started making some money, teach them how to give. You can help them choose a charity, church, or someone they know that needs some assistance. They will eventually see that giving does not only affect the people it is given to but also the giver. Know about something new on  mnsud2l

 How to teach teenagers about money 

Teach them to be content. Most teens spend a lot of time scrolling through social media. Every second they spend online, they are seeing their friends’ highlights reels, as well as those of complete strangers. This is the fastest way to fall for the comparison trap.

They should be able to manage a bank account. If you have been managing money for a while, your child should be able to set up a bank account. This will take money management to the next level and prepare your child for managing a larger account later in life.

Encourage them to save for college. It’s never too late to encourage your teenager to start saving for college. Are they planning to work a summer job? That’s great! You can take a portion (or more) of the money and put it in a college savings account. As they help with their education, your teen will feel as though they are part of the team.

Teach them how to avoid student loans. Talk to your teen about how you will pay for college before they ever apply to college. Your teen should know that student loans won’t be an option for funding their education. Discuss all options, including community college, in-state universities, part-time work, and applying for scholarships.

 Make a change to your family finances 

It will take some time to teach your children money lessons at every stage. Also, It will not always be easy. It will not always be easy, but it is worth the effort if you want to teach your children how to manage their money.

Giving your children the opportunity to make money is one of the best ways to teach them about money management. 

 3. Teaching Practical Money Lessons With Everyday Expenses  

Involve them in paying monthly bills.  Utility bills, mortgages or rent, insurance premiums, and credit card payments, all of these things are part of living on your own and being a responsible adult.  The teen years are the right time to expose your children to these responsibilities and get them accustomed to the process of making payments when they are due.

This is a great time to teach children to shop for the best rates and plans on these recurring bills.  Whether it is your GA Natural Gas bill, or your credit card interest rate, teaching your children to shop and compare rates will make them more informed when they find themselves managing their own household finances.

 

 Bottom line 

Understanding how much it costs to manage a home and the importance of paying your bills on time can help you avoid costly mistakes. Some people learn these lessons once they’re at college or living on their own, but you can help give your kids a leg up by taking a proactive approach to their financial education.

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